My employer gave us $1000 bonus for Christmas. My employer gave us our tax returns W2 and a 1099-NEC form for the $1000 bonus. I’m not an independent contractor.

[mmac1132]

Is this correct? I tried to file and then it also is making me file a schedule C form that is asking me about my “business”, which I don’t own. Additional information, I have worked for this company for 3 years now. It’s a standard 9-5 job with hourly pay. I do absolutely no work for this company when my work shift is over. Can I still file these? Thank you.

[rjs]

No, it's not correct. All payments from your employer are supposed to be included on your W-2.

To report the bonus, you enter the income as additional wages that were not reported on a W-2. You will have to pay the Social Security and Medicare taxes that the employer should have withheld from the bonus. This will be the same amount that would have been withheld if your employer had handled it correctly and included the bonus in your W-2.

The payments will be included in the total wages on Form 1040 line 1. On the dotted line to the left of the amount on line 1 there will be a notation "F8919" and the amount. Form 8919 will be included in your return, with reason code H in column (c). Form 8919 will calculate the Social Security and Medicare taxes. The total of these taxes will appear on Schedule 2 line 6 and will be included in your total tax liability.

Follow these steps to enter the bonus. The first few steps might vary a bit in TurboTax Online, depending on what you have already done.

• On the left side click Federal.
• Click Wages & Income.
• Click "I'll choose what I work on" or "Jump to a full list."
• On the screen "Your 2021 Income Summary," scroll all the way down to the last section "Less Common Income." Click the Start button for the last topic, "Miscellaneous Income, 1099-A, 1099-C."
• On the next screen click the Start button for "Other income not already reported on a Form W-2 or Form 1099."
• The next screen asks "Did you receive any other wages?" Select Yes and click Continue.
• The next two screens ask about household employee wages and sick or disability pay. Click Continue on these two screens without entering anything.
• The next screen asks "Did you earn any other wages?" Select Yes and click Continue.
• The next screen asks the source of the other earned income. Select "Employee compensation that was not reported on a W-2." Click Continue. Ignore the note that says not to enter payments for which you will receive a 1099.
• On the next screen, "Employee Compensation Not Reported on a W-2," click Continue.
• If you are filing a joint return, you will get a screen asking which one of you the income is for. Select your name and click Continue.
• On the next screen, "Report Your Wage Income," enter the employer's name and EIN from your W-2. For Total Wages Received, enter the amount of the bonus. For the Reason Code select "H - I received a Form W-2 and a separate Form 1099-MISC and/or 1099-NEC and the income should have been reported on Form W-2." Click Continue.
• Read the next screen, "Report as Wages," and click Done.

[ErnieS0]

No. Your employer did not correctly report you bonus.

The IRS says:;

During an examination of the taxpayer's 2019 employment tax returns, the examiner found the taxpayer filed both Form W-2 and Form 1099-MISC for several workers. The taxpayer explained that the amounts reported on the Forms 1099-MISC were year-end bonuses paid to employees. Since bonuses were paid to workers for services performed as employees, the bonus payments are considered additional wages subject to employment taxes. The examination would not be considered a worker classification issue.

Form W-2 and Form 1099-MISC Filed for the Same Year

To report this correctly in TurboTax:

1. Delete your 1099
2. Click on Federal in the left column
3. Scroll down to Less Common Income. Select Show more.
4. Start Miscellaneous Income, 1099-A, 1099-C
5. Start Other income not already reported on a Form W-2 or Form 1099 (even though it was reported on a 1099)
6. Say YES to Did you receive any other wages?
7. Continue to Any Other Earned Income
8. Say Yes to Did you earn any other wages?
9. Check Employee compensation that was not reported on a W-2
10. Fill out the information. When you get to Report Your Wage Income the reason code will be H

[gumkat]

I should have been reported on a 1099 MISC. Put it in under OTHER income which will be taxed at your normal State and Federal level.  Since you are NOT an independent contractor you are NOT subject to Self Employment tax on it. 

[Tizliz4]

Thank you so much for helping me with this. My husband's employer for the last three years has given him a bonus and used a 1099NEC. I knew that wasn't right and when I keep asking them - they would say that is what our accountant told us to do. I was so frustrated with this!